Last year, Korean cosmetics companies that recorded the number one market share in the North American cosmetics import market are moving to establish local production facilities and strengthen distribution channels. The plan is to further expand their presence in the North American market while simultaneously offsetting the reciprocal tariffs imposed by the Donald Trump administration.
According to industry sources on the 7th, LG H&H recently decided on a capital increase worth $130 million (approximately 180 billion won) for its U.S. subsidiary LG H&H USA. LG H&H will use $70 million (approximately 97 billion won) for operating funds and improving its financial structure, while $60 million (approximately 83 billion won) will be invested in cash into the local subsidiary The Avon Company for operating funds.
This capital increase is largely aimed at strengthening local distribution channels. LG H&H USA is launching major brands in local large beauty multi-shops and The Avon Company is focusing on door-to-door sales. The Avon Company was acquired by LG H&H in 2019 for 145 billion won, but it has recorded losses for four consecutive years: 5.5 billion won in 2021, 47 billion won in 2022, 40.4 billion won in 2023, and 28 billion won in 2024. While there have been rumors of a possible sale, this additional investment seems to be aimed at revitalizing its North American business.
Kolmar Korea will begin test operations of its second plant in the U.S. starting in the second quarter of this year. After initial pilot testing, full-scale production is expected to start in the third quarter. This plant has been under development since January 2023 and will focus on producing basic cosmetics and sunscreen, which are in high local demand.
Last year, Kolmar Korea's U.S. subsidiary recorded revenues of 57.9 billion won and operating profits of 6 billion won, up 55% and 37%, respectively, compared to the previous year. Kolmar Korea currently operates one plant in Pennsylvania, and the securities market expects that the second plant will bring in an additional 60 billion won in annual revenue for the U.S. subsidiary.
Kolmar Korea is anticipated to offset some of the impacts of the reciprocal tariffs in the U.S. According to Park Eun-jung, a researcher at Hana Securities, "Kolmar Korea's second plant will be equipped with the most advanced facilities in North America, attracting more interest from global and local indie brands," while noting, "We have detected an increase in inquiries for production in the U.S. from domestic brands due to the tariff effects of the Trump administration." Kolmar Korea also stated, "In addition to existing North American clients, discussions are underway with clients who had previously produced in Korea, Canada, and France to shift production to North America."
Amorepacific Corporation is also considering establishing production facilities in the U.S. CEO Kim Seung-hwan stated in a recent interview with Bloomberg TV that "we plan to invest in logistics and modular production facilities in the U.S. within the next 3 to 5 years." Currently, Amorepacific primarily produces products in China and Korea, while operating only logistics centers and research and development offices in the U.S.
Last year, Amorepacific's revenue in North America reached 524.6 billion won, an 83% increase from the previous year. The strong performance can be attributed to the popular responses to its flagship brands Laneige and Innisfree, as well as to COSRX, which was acquired in 2023. CEO Kim noted, "Given the current market growth rate, it seems we should focus on North America, Europe, and Japan in that order. The North American market is a core region for Amorepacific."
According to the Korea International Trade Association, last year, the proportion of Korean products in the U.S. cosmetics import market recorded a market share of 22.4%, up 5.9 percentage points compared to the previous year, making it number one in market share. During the same period, the export scale of Korean cosmetics to the U.S. increased by 54.3% compared to the previous year, reaching $1.71 billion (approximately 23.5 trillion won).
In contrast, France's export to the U.S. was $1.263 billion (approximately 1.75 trillion won) last year, a mere 9.6% increase from the previous year, allowing Korea to take the lead. An industry insider stated, "The domestic brands effectively utilized online platforms such as Amazon during their entry into the U.S. market, which has become an important success strategy."
Recently in the U.S., due to concerns over rising import prices caused by tariffs imposed by the Trump administration, there have been cases of hoarding Korean cosmetics, such as sunscreen. Lee Ga-young, a researcher at Samsung Securities, stated, "K-beauty is growing with its excellent quality, fast and trendy new products, and relatively low prices," and added, "Even if the growth rate of the global cosmetics market slows, K-beauty is creating its own market as an independent category."